LDC, the mid-market private equity arm of Lloyds Banking Group, is to partner with Russian sports car manufacturer Marussia to develop new Formula One team Virgin Racing.
The deal is to inject additional funding into Virgin Racing, and allows LDC to realise a return on its initial investment, while retaining a stake in the team.
LDC’s original investment was completed in the summer of 2009 following Virgin Racing’s successful entry into the FIA Formula One Championship. Marussia has been a sponsor of the team through the 2010 season and approached LDC about investing earlier this year, with an eye to marketing their Marussia B1 and B2 cars.
LDC CEO Darryl Eales said, “This is excellent news for all stakeholders in Virgin Racing. The team has made tremendous progress over the past 12 months and this is testimony to the commitment and skill of the Virgin Racing personnel.”
Formula One is the most lucrative sport in the world. Total revenue last year was estimated at £3bn (€3.3bn), with each of the 17 races producing turnover in excess of £140m (€156.1m), ten times greater than its closest rival, the NFL. However, increasing team expenditure made for uncertain returns for team investors.
The profitability of F1 teams could be increased by a decision by governing body FIA to reduce expenditure. Passed in August, the Resource Restriction Agreement is intended to level the playing field by returning costs to early 1990s levels.
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